Wednesday, August 15, 2007

Huh??? What is eBay Doing Now?

Okay, call me completely confused!

eBay has spent the whole Spring and most of the Summer bringing down the hammer on the bottom 2% of sellers; hoping to clean up the site as well as reduce the low priced crap. I understood the idea behind that move, even if i didn't agree with how they went about it. Now they announce a new marketing effort to get new sellers. Does this make any sense?

"Here's how it works:
From today, August 15th through September 15th, we'll give you $5 for every friend you refer to sell on eBay (up to a total of 10 friends) via our Refer a Friend site. Note that your friend (or better still, friends) should never have sold on eBay before and should list an item during the dates mentioned. We'll credit your referral reward to your eBay Seller Account 6 weeks after the promotional period."

So you can earn $50 in credits if you refer 10 people to open a seller account and list at least one item. Such a deal!!

Why are they trying to get new sellers, especially newbies who are clueless about selling on eBay, when they are trying to clean-up the site. eBay is supposed to be getting new buyers and improve the buyer experience how does this effort accomplish that? I could understand referring 10 friends to buy on the site as a promotion but eBay doesn't need more sellers. The sellers who are here already can barely make ends meet.

eBay has told us over and over again that there is too much low priced crap on the site. What do you think these new sellers are going to be selling? My guess is a lot of low priced crap. Do they even think these promotions through? Besides, a large number of sellers are trying their hardest to get off of eBay, what makes eBay think they would refer anyone? This is a promotion doomed to fail.

What can eBay be thinking? I would love to hear your thoughts.


ONLYEBAY said...

I agree with you it is not a very clever promotion but just to play a little devil's advocate, I will list the reasons eBay probably have in mind.

1st, this month is typically one of the slowest months in the year. Any additional user registrations and listings are welcome.

2nd, at this point, eBay need to improve Q3 user and listings metrics desperately to meet street estimates, any way they can.

3rd, it is true that once a user sees how easy it is to list and sell an item, they are likely to continue selling the odd item over time.

4th, new non-professional sellers are likely to list in core auction format, further helping the listings mix.

5th, five dollars per new seller seems really cheap bearing in mind the affiliate system pays $25 per new buyer.

6th, new sellers may actually bring with them new buyers.

Do you buy any of these?

Sue Bailey said...

Does it count if I open ten new selling accounts myself? :-D

The rationale behind new seller promotions generally (and this is from an eBay employee) is meant to be that selling a few things increases site loyalty overall: people who've sold a couple of things become more enthusiastic buyers.

Anonymous said...

Maybe they'll try selling things around their house, see how low of a price they fetch, and then think to themselves

"Wow I can get stuff really cheap here!"

And become longtime buyers :)

Anonymous said...

The law of supply and demand: More supply drives down prices. Lower prices attracts more buyers.

This move and the "free" listing day have the intended effect of increasing supply.

When you have more supply, seller's knock-themselves by accepting lower prices than they normally would.

Those beautiful lower prices are why buyers/customers come to the site.

Sue Bailey said...

Re. "low-priced crap" - isn't it only low-priced crap that doesn't sell that they object to - i.e. stuff hidden at the back of Stores. Low-priced crap that sells in core for a dollar or two makes Wall Street love them, so I guess they don't mind that.

Randy Smythe said...

All very valid points. Thanks for the responses.

OnlyeBay, I agree that is what eBay was thinking. I just think the promo is laughable. From the sellers POV eBay doesn't need anymore newbie sellers.

Sue, I also agree with your point that sellers become more loyal buyers. Then why are they making it so difficult for Store Sellers who are loyal buyers as well.

As to the point about supply and demand. According to the metrics, there is more supply then there is demand currently. Adding more supply accomplishes nothing except for reducing prices (which was your point) eBay is on record as wanting higher ASP (Average Selling Price)

I do certainly believe it is an attempt at getting more buyers but the reward is minimal and Sellers could make more money off of the Affiliate program.

Thanks for your comments!

Anonymous said...

Yeah I'm sorry, but that supply-demand post must have come from a non-economics major. Randy you got it right. In a normal demand curve, increasing supply lowers the equilibrium price and increases the quantities sold. It does not shift the demand curve up. Supply is not a factor that can change demand.

And for the conclusion: the result would be a zero sum on eBay's fees, so using the Supply Demand argument doesn't really accomplish much.

Anonymous said...

I am totally confused by eBay. First they kick off 5 million sellers, then they change the feedback system and invite all of the loser non paying buyers they threw off earlier back to use the site again as a place to play games, then they remove all of the strikes against the other bunch of losers that have not paid to avoid throwing any more of them off, then they want to get the used garage sale junk off, so they can be more like, then they want to get new sellers but if you don't play the free shipping game you will probably get kicked off anyway when your shipping charge star falls below 4.3 (naturally now if you charge anything at all for shipping, the buyers think you are too high), then they want to get all of their sellers to use the free shipping scam at higher prices so they can make more commission. I give eBay about 2 more years and then gone. The commissions are so high and the profits are so low that it has become more of a headache to stay there than it is worth.

Anonymous said...

The costs charged by eBay and Pay Pal have made mall rent cheaper. With the economy in its current state, there is no profit available in selling new stuff so everybody is selling used junk and calling it new. The scams have gotten so bad that you cannot use the term like new in your description any more but if you check the condition box C-9, it clearly states "Like New". After they pulled several of my listings and sited me in their seller dashboard system (another joke) I pointed this double standard out to them, they simply told me that I was not going to win this point. On March 12, 2009 at Spring Arbor University in Michigan, an assignment handed to a 34 person class ended with 90% of the class reporting that they had been scammed on eBay and would never go there again. I have sold on eBay, but currently closed my store when fees to maintain exceeded 50% of the income. I only sold new and could not even replace the products I sold with the few bucks left after eBay and Pay Pal took theirs. They try to force you to ship for free to raise their profits, they try to get you to ship worldwide knowing how many scammers are out there and you cannot track to any other country (not even Canada). And when Pay Pal received a claim that a person did not get an item (even those that did), it is an automatic refund, shipping and all. So much for the highly advertised eBay seller protection. I can't see eBay surviving too many more years with their constant removal of their largest sellers. And they really need more commercials from Video Professor giving away software telling people how to sell junk on eBay. And I do mean junk. You know the king of junk I am talking about as well. It is a bunch of the useless stuff that belongs in dumpsters that is listed under antiques.